British Expats living in France should look closely at Assurance Vie policies for their Investment and Estate Planning...
Michael Yuille CFP?
???? France-based Certified Financial Planner, ???? U.K. Pension Specialist, ???? USA Investment Adviser Representative, and ???? South African FSP Key Individual.
Now, more than ever, reviewing your finances with a Financial Planner is crucial.
This could not be more valid for those residing in France, where a lack of knowledge of laws and tax obligations does not absolve you from them. Expats living in France must stay abreast of what they need to know, even though this can be challenging.
The Assurance Vie investment account is a financial vehicle that simplifies matters, particularly from a tax standpoint. This instrument, essentially a life insurance wrapper for investments, is popular among French tax residents, including expatriates.
It is known for its tax efficiency and versatility, and for the inheritance tax benefits it provides. The Assurance Vie, similar in many ways to the UK’s stocks and shares ISA, could be a powerful ally in your inheritance tax planning.
However, the Assurance Vie presents a significant difference based on the age you invest: under 70 versus over 70.
Investing in an Assurance Vie under the age of 70:
This allows you to pass on up to €152,500 free of inheritance tax to any beneficiary you designate. Should the investment exceed this amount, a favourable tax rate of 20% applies to the next €700,000. This is an attractive offer compared to standard inheritance tax rates, which can rise to 60% for non-relatives.
Investing in an Assurance Vie OVER the age of 70:
If you choose to invest in an Assurance Vie over the age of 70, the tax-free allowance drops to €30,500. Beyond this, the regular inheritance tax rates apply.
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Nevertheless, this does not mean an Assurance Vie isn’t worthwhile past 70. You could use it to supplement an existing Assurance Vie, potentially raising a beneficiary’s inheritance from €152,500 to €183,000 or spreading the additional €30,500 across multiple beneficiaries.
Furthermore, should you start a new Assurance Vie after turning 70, any gains or interest on the initial €30,500 investment are not subject to death duties. So, if your investment grows over time, the total amount can be passed to the beneficiary without incurring death duties.
Remember, the Assurance Vie is more than just an inheritance planning tool. Its tax efficiency applies throughout your lifetime, even when drawing an income from it.
As always, you must take into account your specific needs before investing. An Assurance Vie is often a medium to long-term investment, and various providers have different terms and penalties for early withdrawal.
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Associate & Introducer at Elgin AMC
1 年Hi Michael, Great post and hope life is treating you well in ????. The concept of the Assurance Vie is great but it's that old argument .....Insurance Company product v Bank product. Would you advise an Insurance Co Assurance Vie for less than €250,000 with the usual Ins Co charges draining any growth ? Who helps the client with less than €250,000 ? Have a great weekend !
I will help you make sense of your finances ? I drive results through data-driven financial planning ? Fee based advisor ? EU and UK qualified and regulated
1 年Very informative and succinct.
Author & Financial Independence Coach- Financial Education for Expats
1 年The tax benefit is attractive indeed! But too many banks are using that as a marketing tool to sell these products riddled with commissions. It's still common to see (useless) 2% entry fees on these products. Make sure you pick an advisor you trust